Thursday, 06 December 2012 10:25
For years Detroit has been on the brink of one financial crisis after another. While the threat of running out of cash is an ever-looming one, this time the State is not buckling under Detroit’s reluctance to change the status quo (or at least the division in leadership over how to change it).
Ultimately, the buzz about the escrowed state funds is a tiny spec on the surface of an enormous financial monster. Let’s be real: Detroit is in way deeper -*- than a $30 million bond sale installment and a few unpaid furloughs can remedy. The city council could approve Miller Canfield contracts all day long and the city would still be down the well so to speak.
At this point big chunks of city operations need to be dissovled or merged. This is serious restructuring that city leaders have been able to pull off over the past decades of post industrial depression.
The consent agreement with the State put in place last spring in lieu of an EFM just isn’t cutting it. As Detroit City Councilman Andre Spivey said on Tuesday:
“…The truth of the matter is we are 8 months away from when the consent agreement [was implemented]. We could have had a baby in this time. But nothing has been done.”
That’s why an Emergency Financial Manager (EFM) now seems inevitable. Since Public Act 4 was suspended in November, the State must revert to the old emergency manager law, Public Act 72, which limits the powers of a state-appointed appointed money czar. By now it’s not a question of “if” anymore, rather “when” and “who”.
While an emergency financial manager would not have the sweeping powers that an emergency manager would have had under PA4, he or she could still take control of financial matters [hopefully] without getting too tangled in politics.
That said, perhaps the most important question for Gov. Risk Snyder when is comes to appointing an EFM to Detroit is the “who.”
It will take an individual of tremendous resolve, intelligence, and overall chutzpah to turn around the roaring southbound train that is Detroit’s finances.
The person who is appointed to head Detroit’s money matters will have to have the resolve of a Hillary Clinton and the optimistic, fiscally conservative outlook of a Rick Snyder.
If it is as Mayor Dave Bing said last week and leading Detroit is the second hardest job in the country, the EFM position could easily line up as the third most challenging.
Aside from negotiating a cease-fire in the Middle East, perhaps negotiating with city unions for hefty pay cuts and layoffs are the most difficult negotiations to make in the nation.
Snyder should appoint as Detroit’s EFM a woman with the character and intelligence of Hillary Clinton.
Conservative Stephen Hadley, former national security adviser to President George W. Bush said recently of Clinton:
“Secretary Clinton in particular stepped forward and exerted some leadership. That's very good news, because what the Middle East has been crying for is greater U.S. leadership."
Well, what Detroit has been crying for is greater leadership, too. So if an emergency financial manager is the only way out, lets make sure that manager is thoroughly vetted and can to the dang thing.
Thursday, 08 November 2012 09:07
Proposal 1 may have been smashed but in Detroit, financial reforms sparked by the emergency manager legislation will be carried out as planned.
Just because voters struck down Proposal 1 doesn’t mean Detroit’s financial crisis was wiped out along with it. In fact, some argue that it’s quite the opposite; that without the State’s legislation to mandate emergency managers in cash-poor cities, these cities have no choice but to apply for bankruptcy, thus obliterating bond ratings and shaking the statewide economy.
With the defeat of Proposal 1 comes a new shower of questions.
Will state legislature draft up a new, similar, emergency manager law? Will any cities that already have emergency managers or advisory boards fight to keep them in place? Will elected officials, in order to avoid further financial chaos, carry on the work and advice that these state-appointed officials have given so far?
In Detroit, Mayor Dave Bing said he plans to carry out the suggested reforms that State and city appointed financial advisors laid out during the brief tenure of PA4. Bing wrote in a statement on Wednesday that the City's Consent Agreement with the State is still in place.
“I am determined to continue with vital reforms now underway in the City of Detroit, despite the defeat of Proposal 1 by Michigan voters in Tuesday’s election ... In the face of the City’s enormous fiscal deficit, I chose to negotiate a Financial Stability Agreement with the State of Michigan, rather than entertain the appointment of an Emergency Manager. The Financial Stability Agreement, approved by Detroit City Council last April, is still in place.”
That answers a couple of the immediate questions. Detroit is one of the municipalities whose leaders are electing to keep the financial advisors appointed through Public Act 4 and the reforms they have suggested.
There are 25 major reforms on the table as part of the consent agreement that Bing met with City Council to discuss last month. At the meeting, Bing got a positive response from the council.
“We are willing participants in the reforms," City Council President Charles Pugh said at the Oct. 22 meeting.
"You have our support," Councilman Andre Spivey told Bing regarding the reforms. "I don't see the Council being an impediment."
At the time, Councilwoman Saunteel Jenkins wanted to know if these reforms could be made Prop. 1 fell through on Nov. 6.
Bing said it didn't.
The Mayor has said that the reforms in question, which involve some compensation shifts for city employees, some reshaping of city departments and the creation of a lighting authority, are necessary for the City to be eligible for up to $80 million in bond sales from the State. Bing said Detroit could receive $10 million by Nov. 15, and another $20 million by Dec. 14 with more installments made as the City meets the reform requirements to boost bond ratings and sales.
Money is the motive for these 25 suggested reforms. Without strengthening bonding capacity Bing has warned over and over that the city will not be able to pay its employees at all, a much more grim outlook than pay cuts or a switch from salary to contract work.
Even opponents of the emergency manager law have to concede: Detroit is in dire financial straights. Just because the State can’t mandate new financial leadership is no excuse for elected officials to sit in denial while the city spins further into financial insolvency. Let’s hope our city leaders do the right thing and make the tough decisions needed.
Is it safe to assume that if we have the right leadership, we won't need Emergency Manager legislation like Public Act 4?
Monday, 18 June 2012 08:39
Every week is a new start. A new chance to get it right. The weekend reset button kicks in and by Monday hopefully things look a little better. At least that’s the case for the political climate in the City of Detroit.
Last week this time the fur was flying around a lawsuit that challenged the legality of the consent agreement. Since then the lawsuit was tossed, and the City Council immediately appointed the remaining members of the 9-meember financial advisory team. The team is set to turnaround city finances as part of the controversial consent agreement with the state. Phew. A lot can change in a week.
Looking at the complete list of appointees, the first thing I noticed was that many of them, seven out of nine are not from Detroit. Board members hail from the Metro Detroit suburbs such as Novi, Bloomfield Hills, Franklin, Birmingham and so on.
As a Detroiter, my knee-jerk response was "These are outsiders!" But after setting aside the involuntary Detroit-centric mentality, this actually seems promising. Speaking of new starts and clean slates, why not get outside opinions on city finances? Detroit has been mismanaging money for years and to put it nicely, "insiders" haven't been doing a great job at holding the city together.
There comes a point when we have to stop pointing fingers as citizens and stay engaged in the turnaround process by not only holding these board members accountable, but also by holding ourselves accountable for our own city. We have to shrug the "us vs. them" mentality that too often stifles progress.
Thursday, 07 June 2012 08:08
It was a theme highlighted by leaders at The Michigan Chronicle’s Pancakes and Politics forum: collaboration. Often leaders speak of collaborating and working together, but it’s hard sometimes to point out specific examples of what that looks like.
That’s why when I read in the Detroit Free Press that sheriffs from Wayne, Oakland and Macomb counties were willing to send officers to help patrol the Detroit fireworks, I thought of a the collaboration theme.
In May at the “Big Four” session of Pancakes and Politics, one attendee asked Detroit Mayor Dave Bing if he would be willing to seek public safety help from surrounding counties Bing’s reply was that he was open to any options to help keep people safe in the city.
This week, that question was fully answered. When Bing asked the leaders in surrounding counties to send officers in to patrol the hundreds of thousands of people expected to attend the 54th annual Target Fireworks show on the Detroit river, the answer was yes. State police will also help patrol the event.
After ripping more than $200 million from this fiscal year’s budget, the city can’t afford to police large events, ones that ultimately draw in residents from all over the region and state.
“It is no longer feasible to have these events funded primarily by Detroit taxpayers.”
It makes sense that the surrounding counties and state would lend a hand. The fireworks may be located in Detroit, but it is a regional, event statewide attraction and therefore, the responsibility of those counties to keep residents safe. The financial burden of events such as this should not be placed solely on Detroit taxpayers in this economic climate. So patrol help from neighbors isn’t a handout, it’s a responsible step to keeping people safe.
Wednesday, 06 June 2012 07:57
The rift between the Detroit mayor’s office and the city council over closing or privatizing city departments was clear at Tuesday’s open meeting. When residents lectured the council for putting the Human Services Department and the Public Health Department on the chopping block, Council member JoAnn Watson made sure to set the record straight that it was the mayor’s office, not the council, that was pushing the cuts. “That was the executive branch,” she told a resident who hotly voiced her concerns about department cuts. “You’re preaching to the wrong group, honey.”
While it wasn’t on the council’s agenda to vote on department decertification this Tuesday, when it does come up for a vote, council will likely vote it down.
But that doesn’t mean city departments are safe from trims. The financial advisory board, appointed under the consent agreement that was approved by the City Council and Mayor Dave Bing, would ultimately take financial decisions away from the council.
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